Corporate Debt Restructuring : A Road to Survival

Corporate Debt Restructuring (CDR) has been used by the companies while facing ugly finances and the bankers willing to consider a flexible mechanism such as CDR, as the banks /financial institutions have to reduce their Non Performing Assets (NPA). CDR is an effective financial tool to provide a flexible mechanism to the corporate management to get back to the top line growth oriented performance, cutting overheads and other unnecessary expenses consolidating their operations and streamlining their balance sheets, cash flows and finances. The main objective of corporate debt restructuring is to ensure timely and transparent mechanism for restructuring of corporate debts of viable entities facing problem, for the benefit of all concerned. To aim at preserving viable corporate that are affected by certain internal and external factors. To minimize the losses to the creditors and other stakeholders through and orderly and co-ordinate restructuring system. As the global economic resurges after several months of an economic slowdown, analysts fastidiously evaluate the impact of debt restructuring processes on the overall well being of the economy. It may be argued that these prevailing conditions are perhaps the appropriate litmus test to assess the success of the CDR system in emerging economies such as India. The paper shall study the practice and theory associated with corporate debt restructuring. Particular emphasis shall be laid on the RBI instituted CDR mechanism in India. The author shall present a present a critique on the CDR system apart from discussing current trends along with the scope of CDR in India and its future prospects